Avon Rubber designs, develops and manufactures products in the protection (70% FY18 sales) and dairy (30%) sectors. Its major contracts are with national security organisations such as the US DoD. Over 70% of 2018 sales were from the US.
Avon’s FY18 delivered growth across both divisions demonstrating the success of the new business strategy to grow the core, add selective product development and make value-enhancing acquisitions to accelerate growth. The AGM statement indicates FY19 expectations should be met despite a challenging dairy market. Success at Protection is flowing from the enhanced product portfolio as orders build visibility. The IDIQ contract award by the US DoD for M69 mask systems worth up to $92.7m received its first supply order for 7,000 masks and accessories worth $17.8m at the start of February.
Avon’s long-standing, multi-level relationship with the US DoD is important to the group and the end market backdrop is supportive. The active dialogue for the M50 replenishment phase should extend the programme for at least another 15 years plus a focus on higher price sophisticated mask systems provide a further opportunity. Meanwhile, growth has been encouraging in Farm Services, building greater visibility into the business. We maintain our view that Avon has the market position, product portfolio and strategic ambition to further accelerate its growth through organic and inorganic means.